More protection for steel industry with dumping levy on products from 6 nations

NEW DELHI, AUGUST 9:

The domestic steel industry got further protection from cheap imports after the Finance Ministry imposed a provisional anti-dumping duty on hot-rolled flat steel products from six countries, including China and South Korea, for a period of six months.

The levy comes within a week of the recommendation from the Directorate-General of Anti Dumping, under the Ministry for Commerce and Industry. “The Department of Revenue’s action has been swift and one of the fastest in recent times,” a Finance Ministry official said.

Less than a week ago, the government had also extended a minimum import price provision on 66 steel products. The products covered under the anti-dumping duty are those which were left out of the minimum import price notification.

The duty will be the difference between the respective prescribed value, which ranges between $474 and $557 a tonne, and the “landed value”. The provisional duty will be applicable till February 7, 2017, the Revenue Department said.

According to the August 8 notification, companies such as POSCO and Hyundai Steel Company of South Korea; JFE Steel, Nippon Steel and Sumitomo Metal Corporation of Japan, and several Chinese steel-makers will face anti-dumping duties if they choose to export to India.

Besides China, South Korea and Japan, the anti-dumping duty will also be applicable on hot-rolled flat steel products coming from Russia, Brazil and Indonesia.

These products are typically used by consumer durables, automobile and engineering industries.

Essar Steel India, SAIL and JSW Steel had jointly filed an application before the DGAD for the initiation of an anti-dumping investigation. Independently, the entire steel industry has been lobbying with the government for such a protective measure.

Sanak Mishra, Secretary-General, Indian Steel Association, welcomed the anti-dumping duty. “It validates that the domestic industry has faced injury from cheap imports. However, the industry was expecting the duration of the anti-dumping duty to be long, as is the case usually. “With the duty in place for only six months, it leaves a certain amount of instability for the future with regard to protection from cheap imports,” he said.

Unhapppy over protection

User industries, including the Engineering Exports Promotion Council, have opposed the move for such protectionist measures on the ground that imports have already been declining. According to credit rating agency India Ratings, several user industries have also delayed purchases of steel in expectation that prices would moderate after such measures expire.

As a result, the growth in domestic steel consumption has slowed to 0.5 per cent during April-July 2016 to 26.18 million tonne. However, according to India Ratings, the domestic production, which grew at 3.8 per cent during the first quarter of fiscal 2016-17, is an indicator that local steel-makers have been able to substitute the falling imports, which dropped 30.7 per cent during the same period.

ICRA, another credit rating agency, said recently that the result of the anti-dumping duty investigation is important for the industry due to the ‘anaemic’ steel demand in the country.

Despite the notification of the anti-dumping duty, steel firms had a quiet day on the Bombay Stock Exchange. JSW Steel’s shares closed down 1.34 per cent at ₹1,706.30, Tata Steel ended the day 1.08 per cent lower at ₹375.45, SAIL lost 1.77 per cent at ₹47.10, while Jindal Steel and Power melted 2.32 per cent to ₹82.20.